Roku (ROKU) AI Stock Analysis

• Market Cap: $16.05B
• Dividend Yield: N/A
• Average Volume (3M): 3.22M
• Price to Earnings (P/E): ―
• Beta (1Y): 2.70
• Revenue Growth: 16.61%
• EPS Growth: 83.98%
• Country: US
• Employees: 3,340
• Sector: Communication Services
• Sector Strength: 97
• Industry: Entertainment
• EPS (TTM): 0.16
• Shares Outstanding: 130,797,710
• 10 Day Avg. Volume: 4,039,479
• 30 Day Avg. Volume: 3,221,719
• PEG Ratio: 1.01
• Price to Book (P/B): 4.31
• Price to Sales (P/S): 2.61
• P/FCF Ratio: 50.48
• Enterprise Value/Market Cap: 0.84
• Enterprise Value/Revenue: 2.95
• Enterprise Value/Gross Profit: 6.78
• Enterprise Value/Ebitda: 55.74
• 1Y Price Target: $118.82
• Price Target Upside: 9.38% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 20
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 71 Outperform
• Price Target: $117.00 ▲(7.71% Upside)

Roku's overall stock score reflects strong financial health and positive technical indicators, tempered by valuation challenges. The company's robust cash flow and strategic growth initiatives, highlighted in the earnings call, are significant strengths. However, profitability issues and valuation concerns weigh on the score. The stock is positioned for growth, but investors should be mindful of the risks associated with its current valuation.

Positive Factors

Strong Platform Revenue Growth

Roku's platform revenue growth indicates robust demand for its services, enhancing its competitive position and providing a stable revenue stream.

Positive Operating Income

Achieving positive operating income reflects improved financial health and operational efficiency, supporting long-term business sustainability.

Expansion in Subscription Services

Expanding subscription services enhances revenue diversification and strengthens Roku's ecosystem, driving future growth.

Negative Factors

Profitability Challenges

Negative profit margins indicate ongoing operational inefficiencies, which could hinder long-term profitability and shareholder value.

Challenges in M&E Advertising

Pressure in the M&E advertising sector could limit revenue growth from advertising, impacting overall financial performance.

Moderate Streaming Hours Growth

Deceleration in streaming hours growth may signal saturation, potentially limiting future engagement and monetization opportunities.

Roku Business Overview & Revenue Model

Company Description

Roku, Inc., together with its subsidiaries, operates a TV streaming platform. The company operates in two segments, Platform and Player. Its platform allows users to discover and access various movies and TV episodes, as well as live TV, news sports, shows, and others. As of December 31, 2021, the company had 60.1 million active accounts. It also provides digital and video advertising, content distribution, subscription, and billing services, as well as other commerce transactions, and brand sponsorship and promotions; and manufactures, sells, and licenses smart TVs under the Roku TV name. In addition, the company offers streaming players, and audio products and accessories under the Roku brand name; and sells branded channel buttons on remote controls of streaming devices. It provides its products and services through retailers and distributors, as well as directly to customers through its website in the United States, Canada, the United Kingdom, France, Mexico, Brazil, Chile, Peru, North and South Americas, and Europe. Roku, Inc. was incorporated in 2002 and is headquartered in San Jose, California.

How the Company Makes Money

Roku generates revenue through multiple streams: 1) Device Sales - The company sells streaming devices and smart TVs, contributing to its hardware revenue. 2) Advertising - Roku earns significant income from advertising on its platform, leveraging its audience data to attract advertisers. 3) Subscription Revenue - Through partnerships with various streaming services, Roku receives a share of subscription fees when users sign up for these services via its platform. 4) Platform Revenue - This includes revenue from services like Roku Channel, where Roku offers ad-supported content and earns ad revenue. The company also benefits from partnerships with content providers and advertisers, which enhance its revenue potential through targeted advertising and promotional deals.

Roku Financial Statement Overview

Summary

Roku's financial performance is characterized by strong revenue growth and cash flow management, but profitability remains a challenge. The income statement shows positive revenue growth, but negative net profit and EBIT margins indicate operational inefficiencies. The balance sheet is stable with low leverage, and cash flow is robust, suggesting good financial health overall.

Income Statement

Roku's income statement shows a mixed performance. The company has achieved a positive revenue growth rate of 3.38% TTM, indicating a steady increase in sales. However, the net profit margin remains negative at -0.61% TTM, reflecting ongoing profitability challenges. The gross profit margin is relatively healthy at 43.58% TTM, but the EBIT margin is slightly negative, suggesting operational inefficiencies. Overall, while revenue is growing, the company needs to address its profitability issues.

Balance Sheet

Roku's balance sheet is relatively stable with a low debt-to-equity ratio of 0.17 TTM, indicating conservative leverage. However, the return on equity is negative at -1.08% TTM, highlighting challenges in generating returns for shareholders. The equity ratio stands at a solid level, suggesting a strong capital base. The company appears financially stable but needs to improve its profitability to enhance shareholder value.

Cash Flow

Roku's cash flow statement shows positive trends with a free cash flow growth rate of 15.10% TTM, indicating improved cash generation. The operating cash flow to net income ratio is 0.37 TTM, reflecting a decent conversion of earnings into cash. The free cash flow to net income ratio is high at 0.99 TTM, suggesting efficient cash management. Overall, the company demonstrates strong cash flow performance, which is a positive sign for its financial health.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	4.54B	4.11B	3.48B	3.13B	2.76B	1.78B
Gross Profit	1.98B	1.81B	1.52B	1.44B	1.41B	808.22M
EBITDA	240.76M	219.86M	-362.87M	-148.61M	408.78M	49.93M
Net Income	-27.66M	-129.39M	-709.56M	-498.00M	242.38M	-17.51M
Balance Sheet
Total Assets	4.40B	4.30B	4.26B	4.41B	4.08B	2.27B
Cash, Cash Equivalents and Short-Term Investments	2.30B	2.16B	2.03B	1.96B	2.15B	1.09B
Total Debt	457.40M	591.93M	654.27M	719.33M	521.71M	438.32M
Total Liabilities	1.77B	1.81B	1.94B	1.77B	1.32B	942.53M
Stockholders Equity	2.63B	2.49B	2.33B	2.65B	2.77B	1.33B
Cash Flow
Free Cash Flow	448.71M	212.98M	173.24M	-149.90M	188.04M	65.81M
Operating Cash Flow	455.36M	218.04M	255.86M	11.79M	228.08M	148.19M
Investing Cash Flow	-823.74M	-25.06M	-92.62M	-201.70M	-176.82M	-81.32M
Financing Cash Flow	-179.22M	-89.20M	-61.24M	8.36M	1.00B	509.05M

Roku Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 108.63
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ROKU, the sentiment is Positive. The current price of 108.63 is above the 20-day moving average (MA) of 98.14, above the 50-day MA of 98.26, and above the 200-day MA of 83.20, indicating a bullish trend. The MACD of 1.60 indicates Negative momentum. The RSI at 67.95 is Neutral, neither overbought nor oversold. The STOCH value of 63.57 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ROKU.

Roku Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DIS	77 Outperform	$201.58B	17.58	11.01%	0.89%	5.00%	144.65%
FOXA	77 Outperform	$26.76B	14.32	17.33%	0.86%	14.91%	9.30%
ROKU	71 Outperform	$16.05B	―	-1.09%	―	16.61%	83.98%
NFLX	69 Neutral	$466.14B	45.96	42.86%	―	15.49%	35.53%
WBD	69 Neutral	$55.18B	73.81	2.18%	―	-3.79%	―
WMG	63 Neutral	$16.07B	54.53	54.66%	2.37%	1.36%	-45.79%
Sector *	60 Neutral	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%

Roku Corporate Events

Roku’s Stock Buyback Program: Potential Risks and Investor Concerns

Roku Inc. faces significant risks associated with its stock repurchase program, as the company has no obligation to repurchase a specific amount of shares or to complete the program, which can be altered or terminated at any time. This uncertainty may undermine investor confidence and negatively impact the company’s stock price and reputation. Moreover, the program could increase stock price volatility and reduce market liquidity, while also limiting the company’s cash reserves for essential business activities. Consequently, any changes to the program could lead to a decrease in the trading price of Roku’s Class A common stock.

Roku’s Stock Buyback Program: Potential Risks and Investor Concerns

Roku Inc. faces potential risks with its stock repurchase program, as it is not obligated to repurchase a specific amount of shares and may alter or terminate the program at any time. This uncertainty could harm investor confidence and affect the company’s stock price and market liquidity. Additionally, the program might not enhance long-term stockholder value and could reduce available cash for other corporate needs. Any changes or termination of the program might lead to increased stock price volatility and a decrease in trading price.

Roku Inc. Earnings Call Highlights Growth and Optimism

Roku Inc.’s recent earnings call painted a generally positive picture, highlighting several financial milestones and a strong outlook for future growth. The company celebrated achievements in platform revenue growth and product expansion, although it acknowledged some challenges, such as a slight deceleration in streaming hours and pressures within the media and entertainment advertising sector.

Roku Inc. Reports Strong Q3 2025 Earnings

Roku Inc., a pioneer in TV streaming, connects users to content, enables content publishers to build audiences, and provides unique advertising solutions. In its latest earnings report, Roku Inc. announced a positive operating income for Q3 2025, marking its first since 2021, with a 17% year-over-year increase in platform revenue driven by streaming services distribution and video advertising. The company also repurchased $50 million of its common stock and raised its full-year outlook, emphasizing its focus on long-term shareholder value through increased free cash flow per share.

Roku’s Stock Buyback Program: Potential Risks and Uncertain Impact on Investor Confidence

Roku Inc. faces a significant risk with its stock repurchase program, as the company has no obligation to repurchase a specific amount or number of shares, and the program can be altered or terminated at any time. This uncertainty may lead to increased volatility in the trading price of its Class A common stock, potentially affecting investor confidence. Furthermore, the repurchase activities could deplete cash reserves needed for operational and strategic initiatives. Consequently, the program’s impact on long-term stockholder value remains uncertain, posing a risk to the company’s financial stability.